Aug 11, 2010
Brazilian Soybean Acreage Estimated to Increase 3-4% in 2010/11
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The Brazilian soybean acreage is expected to increase 3% to 4% in 2010/11 due to: improved soybean prices, higher potential returns for soybeans, reduced costs of production, and dismal domestic corn prices in Brazil
Farmers in southern Brazil appear to be poised to repeat what they did last year when they cut back on full season corn production in favor of increased soybean acreage. As spring planting approaches in southern Brazil, farmers are analyzing the cost of production and the potential returns for corn and soybeans and they are coming to the conclusion that soybeans will once again give them the best opportunity to make money in 2010/11.
The recent increase in soybean prices has sealed the deal for many farmers especially since domestic corn prices in Brazil remain depressed. In the state of Parana for example, which is Brazil's largest corn producing state, farmers last year reduced their full season corn acreage by 29% (375,000 hectares) and they increased their soybean acreage by 10% (435,000 hectares). Estimates are that the corn acreage in the state could decline another 10% in 2010/11 and soybean acreage in the state could increase 3%. A similar pattern is expected in Rio Grande do Sul and Santa Catarina as well.
Even though they reduced their corn acreage last season, the weather was so good that the total corn production actually increased year on year. In addition, farmers in Mato Grosso greatly expanded their safrinha corn acreage and the result was a glut of corn in the domestic market. Corn has been piled on the ground in Mato Grosso while they wait for the government to purchase the corn at subsidized prices. Brazilian corn exports are expected to increase due to the drought in Russia and Eastern Europe, but they are not expected to increase enough to pull up domestic corn prices enough to offset the increases in soybean prices.
With the recent surge in soybean prices to above the US$ 10 dollar mark for March, farmers in central Brazil may also consider a slight increase in their soybean acreage as well. Ten dollars is always a psychological benchmark for soybean prices in Brazil. If the price is below ten dollars, farmers in Mato Grosso have a hard time making any money. If the price is above ten dollars, farmers in Mato Grosso feel much better about the possibility of making money growing soybeans.
Mato Grosso is the largest soybean producing state in Brazil, but there is very little full season corn grown in the state. The only major crop that competes with soybean acreage in the state is cotton, but the total cotton acreage in the state (slightly more than 400,000 hectares) is only a fraction of the state's soybean acreage which is expected to be approximately 6.3 million hectares.
Last year, the Brazilian soybean acreage continued to increase as the planting progressed. That could occur again this year especially if soybean prices continue to strengthen.
Total Brazilian soybean production in 2010/11 may decline even though acreage may increase - Soybean planting in Brazil is still a number of weeks away, but the possibility of repeating record soybean yields in Brazil again this year is very low. It might be especially hard to repeat those high yields this year if the predictions of a La Nina turn out to be accurate. La Nina events usually result in below normal rainfall in southern Brazil at least during the spring and early summer. The planting window for soybeans in southern Brazil is very wide, but if planting gets delayed past the end of November, soybean yields generally tend to go down.
The first soybeans planted in Brazil are always planted in Mato Grosso. If the soil moisture is adequate, they will start planting on September 16th. Even though the planting window in Mato Grosso is also very wide, farmers in the state have been planting their soybeans as early as possible to allow time to plant a second crop of corn or even cotton. Soybeans can be planting in Mato Grosso until the end of November without any yield loss.
If the weather during the Brazilian growing season is good, Brazil's soybean production might equal that of last year (68.4 million tons). If La Nina results in a dry and delayed start to the growing season and if the weather in early 2011 is problematic, Brazil's 2010/11 soybean production could fall 5 million tons or more short of last year.